The goal is to achieve "mutual recognition of regulators" so that, for example, UK auditors working with clients who have a U.S. market listing are not subject to inspection by both the UK Financial Reporting Council (FRC) and the U.S. Public Company Accounting Oversight Board (PCAOB). According to the December 2007 Accountancy Age piece, the criteria the PCAOB is using to determine if it can rely on a particular country's regulators include:

the adequacy and integrity of the oversight system; the independence of the system's operation from the auditing profession; the independence of the system's source of funding; the transparency of the system and the system's historical performance.

But apparently the process of setting up an international oversight system isn't going as smoothly as one might have hoped -- or at least not from the EU's perspective. Another Accountancy Age piece, from Thursday this time, says the European regulators are insisting on access to audit records of U.S. companies listed in European markets if the PCAOB will be inspecting the records of European companies that are listed in the U.S. Pierre Delsaux, a director in internal markets at the European Commission, reportedly said, "If we don't have some kind of agreement, many practical obstacles will exist."

Considering that the PCAOB is asking for the right to inspect foreign company audits, the least it can do is allow foreign regulators to inspect U.S. company records -- at least until they get this "mutual recognition of regulators" concept figured out. Otherwise, like Peter Wyman, global head of regulatory affairs at PricewaterhouseCoopers said in the Accountancy Age piece, 'There's a very real risk now that all the world will inspect all the rest of the world..."

No one wants that on a long-term basis. It would defeat the purpose of mutually recognized regulators altogether.